The mortgage market bounced back in December with the number of loans approved rising to their highest level in almost a year.

Figures from the Bank of England showed 55,785 homebuyer mortgages were approved during the month, against an average of 50,058 for the previous six months.

This was the fifth consecutive monthly increase and the highest number since January 2012, and suggested the government's Funding for Lending scheme, launched at the start of August to kick-start lending to consumers and business, may be having the desired effect on the housing market.

Lending secured on dwellings rose by £1bn, compared to the previous six-month average increase of £0.4bn, on a seasonally adjusted basis. However, the gap between gross lending and repayments remained narrow – while £12.4bn was advanced by lenders, £11.9bn was repaid.

Adrian Anderson, director of mortgage broker Anderson Harris, said: "The number of people taking out new mortgages continued to rise in December, reflecting what we are seeing in the marketplace.

"The government's Funding for Lending scheme continues to make more money available at cheaper rates to lenders, and this is trickling through to borrowers."

Separate figures from the Building Societies Association (BSA) showed that mutual lenders boosted their share of the mortgage market in 2012, offering 22% of new lending compared with 17% in 2011. The societies advanced £30.7m over the year, up 30% on the previous year.

The director general of the BSA, Adrian Coles, said: "Mutual lenders such as building societies are likely to continue to play a prominent role in the mortgage market in 2013.

"Well over half of the 35 firms signed up to the Funding for Lending scheme in December are mutuals. The full potential of the scheme and its benefits to homebuyers will be demonstrated as the year progresses."

Rise in unsecured debt

The BoE's figures also showed unsecured consumer credit increased over the month, with the value of debt (excluding student loans) rising by £649m – above the £181m averaged over the course of 2012.

The amount borrowed through loans and overdrafts outstripped repayments for the first time in three months, adding up to £417m of net new borrowing, while £232m was added to the nation's credit card debt.

Howard Archer, chief UK economist at IHS Global Insight, said the uplift in unsecured borrowing was likely to be seasonal, and remains limited compared to long-term trends – since 1993 the average monthly increase has been £863m.

"It is very possible that a significant number of people borrowed more in December to pay for Christmas presents and celebrations. With CPI moving back up in the fourth quarter of 2012 and wage growth muted, a significant number of people may have been financially stretched over Christmas," he said.

He added that in the long term consumer appetite for taking on new borrowing was limited, and there was a desire among many consumers to reduce their debt.